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Greenspoon Marder, Washington DC-based partner, Jessica Wasserman testified Tuesday at the International Trade Commission before the Section 301 Committee, an interagency panel including the US Trade Representative’s Office (USTR), the Commerce Department, the Treasury Department and the Department of Agriculture. Greenspoon Marder testified on behalf of clients whose imports are threatened with a 25% tariff if US President Trump and China’s President Xi are not able to come to an agreement over US allegations that China engages in unfair trade practices in the technology sector.

The products at issue are those on USTR’s list 4, making up $300 billion of US imports from China. The US has already tariffed approximately $300 billion of Chinese imports at a rate of 25% and list 4 represents the balance of imports from China. Until now, the retail sector, including clothing, household goods, etc., has largely avoided the tariffs, but list 4 now threatens the prices and access for these products going forward. Major retailers such at Walmart, Target, Best Buy, etc. are now potentially impacted and are engaging in a major lobbying effort against imposition of this 4th round of tariffs.

Greenspoon argued that imposing tariffs would not bring production and jobs back to the US for these products and that production could not be moved to a country other than China. There is limited capacity in countries with low wage structures such as Vietnam and other countries in SE Asia and it is unrealistic to expect all US producers in China to move immediately if ever to alternate sources for supply. Therefore, companies, especially small and mid-sized companies will be forced out of business by 25% tariffs because an additional 25% price hike for consumers will reduce sales.

There is no legal requirement for President Trump to impose tariffs according to a mandated time line following the hearing; however, the expectation has been that tariffs would go into effect some time in July. With the announcement yesterday, via Tweet by President Trump, that a meeting between Trump and Xi had materialized as a sideline meeting of the G-20 Summit in Osaka, Japan, on June 28-29, there there is some new hope that tariffs might be postponed if negotiations are to resume.

Background

Concerns over China’s policies on intellectual property technology, and innovation led the Trump Administration in August 2017 to launch a Section 301 investigation of those policies. Consequently, the United States has implemented three rounds of tariff increases on a total of $250 billion worth of Chinese products, while China has increased tariffs on $110 billion worth of U.S. products. The Trump Administration has threatened to increase tariffs on nearly all remaining imports from China.

Sections 301 through 310 of the Trade Act of 1974,as amended, are commonly referred to as “Section 301.” It is one of the principal statutory means by which the United States enforces U.S. rights under trade agreements and addresses “unfair” foreign barriers to U.S. exports. Section 301 procedures apply to foreign acts, policies, and practices that the USTR determines either (1) violate, or are inconsistent with, a trade agreement; or (2) are unjustifiable and burden or restrict U.S. commerce. The measure sets procedures and timetables for actions based on the type of trade barrier(s) addressed. Section 301 cases can be initiated as a result of a petition filed by an interested party with the USTR or initiated by the USTR. Once the USTR beginsa Section 301 investigation, it must seek a negotiated settlement with the foreign country concerned, either through compensation or an elimination of the particular barrier or practice.

On March 22, 2018, President Trump signed a Memorandum on Actions by the United States Related to the Section 301 Investigation. Described by the White House as a targeting of China’s “economic aggression, ”the memorandum identified four broad policies that justified U.S. action against China under Section 301. Subsequently, the Trump Administration increased tariffs by 25% on three tranches of tariff products with combined value of $250 billion worth of imports from China and has threatened to boost tariffs on nearly all remaining products from China (valued at $300 billion). China has increased tariffs (at rates ranging from 5% to 25%) on $110 billion worth of imports from the United States.

For more information and to learn if products you import are include on list #4, contact Jessica Wasserman at jessica.wasserman@gmlaw.com or 202-669-9449.

About Greenspoon Marder

Greenspoon Marder is a national full-service business law firm with 240 attorneys and 26 locations across the United States. We are ranked amongst American Lawyer’s Am Law 200, as one of the top law firms in the U.S. since 2015. Since our inception in 1981, our firm has been committed to providing excellent client service through our cross-disciplinary, client-team approach. Our mission is to understand the challenges that our clients face, build collaborative relationships, and craft creative solutions designed and executed with long-term strategic goals in mind. We serve Fortune 500, middle-market public and private companies, start-ups, emerging businesses, individuals and entrepreneurs nationwide.

This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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